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Editorial

President's other glitch

Poor handling of economy spurs call for additional jobless benefits

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Tuesday November 26, 2013 5:38 AM

In a tacit recognition that his stewardship of the economy has been lackluster, President Barack
Obama is championing another extension of unemployment benefits through 2014.

While it is troubling and sad that so many people still are seeking work or have given up
looking, Obama’s proposal has the appearance of a vote-buying scheme to get his party — already
nervous about the disastrous health-care rollout — past next fall’s election.

Created in 2008, before Obama took office, the federal unemployment-insurance extension so far
has cost about $250 billion. Extending it again through next year would cost another $25
billion.

The maximum length of time one is eligible to collect benefits is tied to a state’s unemployment
rate; Ohioans currently are eligible for 37 weeks of federal benefits in addition to 26 weeks of
state compensation, for a total of 63 weeks. A spokesman for the Ohio Department of Job and Family
Services said about 37,000 Ohio residents now are receiving the extended federal benefits, but he
did not yet have a number of how many of those people would exhaust their unemployment benefits by
early next year if the federal program isn’t extended.

Supporters say giving such aid is the best form of stimulus, because it is quickly returned to
the economy. While supporting those who are still struggling in Obama’s economy arguably creates
more quantifiable benefit than most of the stimulus spending undertaken in the past several years,
it is nonsensical to say that handing out benefits itself is always a good use of taxpayer money.
If it were, the government would be well-served to just give every American a regular allowance and
let the magic work.

But common sense and a number of studies show that generous unemployment benefits create a
disincentive to work. Even as a modest recovery has taken hold and some companies find it hard to
hire enough workers, unemployment has remained high. Especially telling are the number of long-term
unemployed and the number of people who gave up looking for a job after an extended period of
unemployment. The dramatic growth in the number of people seeking federal disability payments is
evidence that disability has become a way for some to extend benefit payments beyond their
eligibility for unemployment insurance.

No one is getting rich collecting unemployment; the average weekly benefit in Ohio is $300. But
research and anecdotal evidence suggest that some who have the option will not take lower-paying
jobs they consider not good enough and instead will wait until their benefits run out before they
are motivated to take a job. In an article published a year ago in the
Journal of Monetary Economics, Makoto Nakajima of the Federal Reserve Bank of Philadelphia
found that “ongoing extensions of (unemployment) benefits...contributed to an increase in the
unemployment rate by 1.4 percentage points” between 2009 and 2011.

If Obama is concerned about out-of-work Americans, he should focus on policies that encourage
businesses to hire and people to work. Instead, laws such as the floundering health-care overhaul —
which is converting many full-time workers into part-timers and inhibiting new hiring — are doing
the opposite.

Obama’s call for yet another extension of unemployment benefits underlines what his nearly five
years in office have given the country: A permanently underachieving economy and a corresponding
increase in dependency.